The following calendar year-end information is taken from the December 31, 2013, adjusted trial balance and other records of Elegant Furniture.

Required 1. Prepare the company’s 2013 manufacturing statement.

2. Prepare the company’s 2013 income statement that reports separate categories for

(a) selling expenses and

(b) general and administrative expenses.

Analysis Component 3. Compute the

(a) inventory turnover, defined as cost of goods sold divided by average inventory, and

(b) days’ sales in inventory, defined as 365 times ending inventory divided by cost of goods sold, for both its raw materials inventory and its finished goods inventory. (To compute turnover and days’ sales in inventory for raw materials, use raw materials used rather than cost of goods sold.) Discuss some possible reasons for differences between these ratios for the two types of inventories. Round answers to one decimal place.

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Advertising expense $ 20,250 Direct labor. $ 562,500 Depreciation expense-Office equipment. 8,440 Income taxes expense 136,700 Depreciation expense-Selling equipment 10,125 Indirect labor.. 59,000 Depreciation expense-Factory equipment 35,400 Miscellaneous production costs 8,440 Factory supervision 121,500 Office salaries expense 70,875 Factory supplies used 6,060 Raw materials purchases 894,375 Factory utilities 37,500 Rent expense-Office space 23,625 Inventories Rent expense-Selling space 27,000 Raw materials, December 31,2012 .. 40,375 Rent expense-Factory building 93,500 Raw materials, December 31, 2013. Goods in process, December 31, 2012 Goods in process, December 31, 2013 Finished goods, December 31, 2012.. Finished goods, December 31, 2013 70,430 Maintenance expense-Factory equipment 30,375 12,500 Sales.... 5,000,000 14,100 Sales discounts 57,375 177,200 Sales salaries expense 295,300 141,750